The Ministry of Labor and Employment has made the contribution above the monthly salary limit of Rs 15,000 voluntary under the New Employees Provident Fund (EPF) Scheme-2026. This means that it will no longer be mandatory to contribute more than Rs 1,800. According to the new EPF scheme notified on Monday, the contribution payable to a member will be subject to the salary limit notified from time to time by the Central Government. According to the notification, under the provisions of sub-paragraph (4) of paragraph 9, if the monthly salary of a member exceeds the prescribed salary limit, then the contribution of both the employer and the employee will be limited to the contribution payable only on the basis of salary limit.
This information given in the notification
The notification states that in cases where contribution on high salary is allowed under the Employees’ Pension Scheme, 1995, the employer can contribute to the pension fund even a portion in excess of the salary limit. However, under the scheme, the employer’s contribution will be 12 percent of the salary of the concerned employee and the employee’s contribution will also remain equal to that of the employer. At present, contribution is made at the rate of 12 percent on the salary limit of Rs 15,000, which is a maximum of Rs 1,800. Under the new system, contribution above this limit will depend on the wishes of the employee and the employer. Earlier, under the Employees’ Provident Fund Scheme 1952, employees would contribute their actual basic salary once they joined the scheme and the employer would also contribute the same amount, even if the salary exceeded the prescribed limit.
Employee and employer have options
After the amendment in 2014, the employer’s 8.33 percent contribution to the Employees’ Pension Scheme (EPS) was limited to a salary limit of Rs 15,000 (i.e. a maximum of Rs 1,250 per month), while the amount above that amount went to the EPF account. There is also a provision in the new EPF scheme that in cases where contribution is allowed at higher salaries under the Employees’ Pension Scheme 1995, the employer can deposit the amount in excess of the salary limit in the pension fund. After this change, both the employee and the employer will have the option to contribute only up to the salary limit or voluntarily contribute more on the actual higher salary. However, no comment has yet come from the Labor Ministry on this change in provident fund contribution.
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